Significant financial changes have been underway in the U.S. agricultural system. After a decade of increases in crop and livestock prices mirrored by corresponding increases in expenses, prices began declining dramatically in 2014 (USDA-NASS, 2017). Figure 1 shows yearly net farm income for Nebraska crop and livestock producers from 2000 to 2015 (USDA, ERS). A survey in July 2016 indicated that 52 percent of Nebraska farmers and ranchers were financially stressed

Brooks, Kate

Walters, Cory

Parsons, Jay

Ramirez, Andrea

Van Tassell, Larry

Lubben, Bradley D.

Aiken, J. David

English

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University of Nebraska - Lincoln
DigitalCommons@University of Nebraska - Lincoln
Cornhusker Economics Agricultural Economics Department
1-23-2018
Characteristics Contributing to Nebraska Farm and
Ranch Financial Stress
Kate Brooks
University of Nebraska-Lincoln, kbrooks4@unl.edu
Cory Walters
University of Nebraska-Lincoln, cwalters7@unl.edu
Jay Parsons
University of Nebraska-Lincoln, jparsons4@unl.edu
Andrea Ramirez
University of Nebraska-Lincoln
Larry Van Tassell
University of Nebraska-Lincoln, lvantassell2@unl.edu
See next page for additional authors
Follow this and additional works at: http://digitalcommons.unl.edu/agecon_cornhusker
Part of the Agricultural Economics Commons
This Article is brought to you for free and open access by the Agricultural Economics Department at DigitalCommons@University of Nebraska -
Lincoln. It has been accepted for inclusion in Cornhusker Economics by an authorized administrator of DigitalCommons@University of Nebraska -
Lincoln.
Brooks, Kate; Walters, Cory; Parsons, Jay; Ramirez, Andrea; Van Tassell, Larry; Lubben, Bradley D.; and Aiken, J. David,
"Characteristics Contributing to Nebraska Farm and Ranch Financial Stress" (2018). Cornhusker Economics. 936.
http://digitalcommons.unl.edu/agecon_cornhusker/936
Authors
Kate Brooks, Cory Walters, Jay Parsons, Andrea Ramirez, Larry Van Tassell, Bradley D. Lubben, and J. David
Aiken
This article is available at DigitalCommons@University of Nebraska - Lincoln: http://digitalcommons.unl.edu/agecon_cornhusker/
936
agecon.unl.edu/cornhuskereconomics 
  Cornhusker Economics 
 
It is the policy of the University of Nebraska–Lincoln not to discrimi-
nate based upon age, race, ethnicity, color, national origin, gender-identity, sex, pregnancy, 
 
January 23, 201/ 
Characteristics Contributing to  
Nebraska Farm and Ranch Financial Stress 
Market Report  Year 
Ago  4 Wks Ago  1-19-17 
Livestock and Products, 
Weekly Average          
Nebraska Slaughter Steers, 
35-65% Choice, Live Weight. . . . . . .  122.00  *  * 
Nebraska Feeder Steers, 
Med. & Large Frame, 550-600 lb. . . . .  158.79  177.37  185.50 
Nebraska Feeder Steers, 
Med. & Large Frame 750-800 lb. . .. .  137.56  162.67  152.13 
Choice Boxed Beef, 
600-750 lb. Carcass. . . . . . . . . . . . . .  191.65  203.00  205.89 
Western Corn Belt Base Hog Price 
Carcass, Negotiated . . . . . . . . . . . . . ..  63.79  55.42  69.61 
Pork Carcass Cutout, 185 lb. Carcass 
51-52% Lean. . . . . . . . . . . . . . . . . . . .  78.99  76.81  80.05 
Slaughter Lambs, wooled and shorn, 
135-165 lb. National. . . . . . .  141.93  132.24  128.01 
National Carcass Lamb Cutout 
FOB. . . . . . . . . . . . . . . . . . . . . . . . . . .  347.75  380.49  368.74 
Crops, 
Daily Spot Prices          
Wheat, No. 1, H.W. 
Imperial, bu. . . . . . . . . . . . . . . . . . . . .  3.07  3.24  3.46 
Corn, No. 2, Yellow 
Columbus, bu. . . . . . . . . . . . . . . .  3.26  3.12  3.25 
Soybeans, No. 1, Yellow 
Columbus, bu. . . . . . . . . . . . . .. . .  9.67  8.76  8.99 
Grain Sorghum, No.2, Yellow 
Dorchester, cwt. . . . . . . . . . . . . . . . . .  5.03  5.57  6.34 
Oats, No. 2, Heavy 
Minneapolis, Mn, bu. . . . . . . . . . . . . . .  2.90  2.79  3.08 
Feed          
Alfalfa, Large Square Bales, 
Good to Premium, RFV 160-185 
Northeast Nebraska, ton. . . . . . . . . . .  145.00  162.50  * 
Alfalfa, Large Rounds, Good 
Platte Valley, ton. . . . . . . . . . . . . . . . .  70.00  87.50  90.00 
Grass Hay, Large Rounds, Good 
 Nebraska, ton. . . . . . . . . . . . . . .. . . .  85.00  82.50  82.50 
Dried Distillers Grains, 10% Moisture 
Nebraska Average. . . . . . . . . . . . . . . .  107.25  150.50  151.50 
Wet Distillers Grains, 65-70% Moisture 
Nebraska Average. . . . . . . . . . . . . . . .  43.50  45.08  47.00 
 ⃰ No Market          
Significant financial changes have been underway in 
the U.S. agricultural system. After a decade of increases 
in crop and livestock prices mirrored by corresponding 
increases in expenses, prices began declining dramati-
cally in 2014 (USDA-NASS, 2017). Figure 1 shows 
yearly net farm income for Nebraska crop and livestock 
producers from 2000 to 2015 (USDA, ERS). A survey 
in July 2016 indicated that 52 percent of Nebraska 
farmers and ranchers were financially stressed.  
Figure 1: Nebraska Net Farm Income (2000 to 2015). 
Source: USDA, ERS 
Because producers are unique in their production 
costs, yields, prices, capital allocation, location, etc., 
identifying the demographic and financial characteris-
tics that are contributing to financial stress is important 
to gain a deeper understanding of the problem. With 
this in mind, a survey of Nebraska agricultural crop 
and livestock producers was conducted in the summer 
of 2016 with the overall goal of evaluating financial 
stress. While identifying stress is useful, identifying 
actions producers intend to take to help ensure farm  
.  survival is equally important. Using the same demographic 
and financial characteristics used in the stress model, we 
evaluate the characteristics contributing to producers: (1) 
focusing on increasing revenue and/or (2) lowering costs. 
Models were used to determine variables that impacted the 
likelihood a producer was financially stressed as well as how 
they were planning to react to it.  
The following discussion summarizes results found in the 
manuscript that will be published in early 2018 in the 
Journal of the American Society of Farm Managers and 
Rural Appraisers. 
Surveys were mailed to livestock and crop producers across 
the state of Nebraska regarding their farm financial health. 
An online survey was also available and publicized by the 
Nebraska Department of Agriculture through news releases 
and radio interviews as well as through Nebraska Com-
modity Boards. A total of 1,000 surveys were returned with 
a total of 758 thoroughly completed and used in the analy-
sis. District representation of the survey participants is pre-
sented in Figure 2a and the percent of participants by dis-
trict agreeing to being financially stressed is presented in 
Figure 2b. While, on average, 52 percent of the respondents 
were financially stressed in Nebraska, there is variability 
across districts.  
Figure 2. District Representation of Survey Participants 
(2a) and Percentage Financially Stressed (2b). 
veyed who indicated they were not taking any actions 
to increase their income. However, 32.2 percent of the 
producers indicated they would pursue off-farm in-
come and 14.8% indicated they were engaged in cus-
tom operations to increase income. Similarly, produc-
ers were asked if they would take any actions to reduce 
operating costs on their livestock or cropping opera-
tion. Twenty-one percent of the producers indicated 
they would not take any action to reduce operating 
costs on either a livestock or cropping operation. Of 
cropping operations, 45 percent indicated they were 
deferring machinery replacement and 43 percent indi-
cated they were reducing family living expenses to re-
duce this year’s operating costs. For livestock opera-
tions, over 17 percent of the survey participants indi-
cated they would reduce family living expenses and/or 
defer machinery replacement.  
Models were used to estimate the likelihood a producer 
with given demographic characteristics (1) was finan-
cially stressed, (2) indicated they were completing at 
least one action to reduce this year’s operating costs 
and (3) indicated they were completing at least one ac-
tion to increase income. The variables that impact pro-
ducer odds of agreeing to being financially stressed are 
found to be different than the variables that impact the 
odds of taking action to increase income or decrease 
operating costs. Across districts, five were more likely 
to indicate being stressed than the Southeast district, 
but only two of those districts were more likely to be 
actively trying to increase income and none of the dis-
tricts were more likely to be actively decreasing costs. 
The Northwest district appears to be the most financial-
ly stressed and trying to increase income compared to 
all other districts.  
Younger producers were more likely to be stressed, 
more likely to be trying to increase income and much 
more likely to be attempting to decrease operating 
costs. Education level also impacted one’s odds of being 
financially stressed and the odds of attempting to de-
crease operating costs, but had no impact on the odds 
of attempting to increase income. Those with a high 
school degree or less were more likely to be financially 
stressed and attempting to decrease operating costs 
compared to those with a post doctorate degree. 
While the likelihood one would be financially stressed 
was higher if they had more than 31% of their income 
from crops compared to the mainly livestock group, 
only those producers with 63 to 94 percent of their in-
come from crops had an increased likelihood of active-
ly trying to increase income. While crop producers 
were more likely to be stressed than livestock produc-
ers, no differences were seen in the likelihood that they 
would be decreasing operating costs.  
 
 
Producers were also asked a series of questions regarding 
actions they were taking to reduce operating costs or to 
increase income. There were 46.7 percent of the producers 
sur- 
Producers who had lower levels of owner’s equity were 
more likely to be financially stressed and more likely to at-
tempt to increase income, but were not different in the like-
lihood of trying to decrease costs. This shows that producers 
with lower equity built up in their operations feel stressed 
and are trying to find ways to increase income outside their 
current farming operation.  
Results indicate that being self-financed (defined as over 80 
percent of operating capital was self-financed) reduced the 
odds of being financially stressed, attempting to increase 
income, and attempting to decrease costs compared to 
those that are not self-financed (defined as less than 80% of 
operating capital was self-financed). This result indicates 
that having working capital to operate lowered stress 
among producers while also lowering their odds of both 
increasing revenue and lowering operating costs over those 
who were not self-financed.  
A producer’s intention to expand land and the farms per 
square mile in the county had no impact on the odds of the 
producer being financially stressed, attempting to increase 
income, or attempting to decrease operating costs. Finally, 
expectations for overall financial conditions had an impact. 
Producers with the expectation that financial conditions 
would be the same in 2017 were less likely to be stressed, 
less likely to attempt to increase income, and less likely to 
attempt to decrease operating costs compared to those who 
felt that financial conditions would be declining in 2017. 
This result suggests that producers with a negative expecta-
tion for financial conditions were more stressed and more 
likely attempting to increase income and decrease operating 
costs to account for the weakening financial conditions. 
As extension programs are designed and implemented 
across Nebraska, attention needs to be paid to where the 
financially stressed producers might be located and factors 
that may be contributing to the stress levels as well as what 
currently stressed producers are doing to increase income 
or decrease operating costs. This will impact programming 
approaches and delivery mechanisms in order to best serve 
the needs of the state. Future research needs to be devel-
oped further to identify stressors among producers and ac-
tions that help to relieve stress across different producer 
groups. 
References 
USDA, ERS. Value added by U.S. agriculture (includes 
net farm income), 2000-2015. Retrieved June 28, 
2017, from United States Department of Agricul-
ture Economic Research Service: https://
data.ers.usda.gov/reports.aspx?ID=17830. 
USDA, NASS. 2017 Agricultural Prices. Available at: 
http://usda.mannlib.cornell.edu/MannUsda/
viewDocumentIn-
fo.do;jsessionid=F154BA78C7C50C021C8CA924
EDB72FD5?documentID=1002.  
Kate Brooks 
Department of Agricultural Economics 
University of Nebraska-Lincoln 
kbrooks4@unl.edu 
 
Cory Walters 
Department of Agricultural Economics 
University of Nebraska-Lincoln 
 
Jay Parsons1 
Department. of Agricultural Economics 
University of Nebraska-Lincoln 
 
Andrea Ramirez 
Department of Agricultural Economics Alumna 
University of Nebraska-Lincoln 
 
Larry Van Tassell 
Department of Agricultural Economics 
University of Nebraska-Lincoln 
 
Bradley D. Lubben 
Department of Agricultural Economics 
University of Nebraska-Lincoln 
 
J. David Aiken 
Department of Agricultural Economics 
University of Nebraska-Lincoln 
 


Characteristics Contributing to Nebraska Farm and Ranch Financial Stress

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